What is a good SaaS churn rate?
Good monthly SaaS churn is roughly 1% or lower for established companies; SMB tools run higher than enterprise. See benchmarks by segment and calculate your impact.
Churn is the rate at which customers (logo churn) or revenue (revenue churn) leave over a period. It is the single biggest lever on lifetime value — a few points of monthly churn can halve LTV.
Benchmarks by segment
| Segment | Typical monthly churn | Annual |
|---|---|---|
| Enterprise SaaS | ~0.5–1% | ~5–10% |
| Mid-market | ~1–2% | ~10–20% |
| SMB / self-serve | ~3–5%+ | ~30–50%+ |
Gross vs net revenue churn
Gross revenue churn only counts lost revenue. Net revenue churn subtracts expansion (upsells, seat growth) from churn — best-in-class companies achieve negative net churn, meaning existing customers grow faster than others leave. See our guide on net revenue retention.
Why churn matters so much
Average customer lifetime ≈ 1 ÷ monthly churn. At 5% monthly churn the average customer stays ~20 months; at 2% they stay ~50 months. That difference flows straight into LTV and how much you can afford to spend on acquisition.
How to reduce churn
- Improve onboarding and time-to-value.
- Identify at-risk accounts with usage signals.
- Offer annual plans to reduce monthly cancel decisions.
- Fix the top 3 reasons customers cite when they leave.
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Open the SaaS Metrics CalculatorFrequently asked questions
What counts as a good monthly churn rate?
For established B2B SaaS, monthly revenue churn of roughly 1% or lower is considered healthy. SMB and self-serve products often run 3–5% or higher and are judged on different benchmarks.
How do I convert monthly churn to annual?
Annual churn = 1 − (1 − monthly churn)^12. It is not simply 12× monthly because retained customers compound. Our SaaS metrics calculator does this automatically.
What is negative churn?
Negative net revenue churn means expansion revenue from existing customers exceeds the revenue lost to churn, so your existing base grows even with no new customers.